Financial Data and Key Metrics Changes - The company reported a net sales decline of 8.1% for Q3 2024, with net sales totaling $127.1 million [41][34] - Gross margin expanded by 210 basis points to 52.3% compared to the previous year [34][45] - Adjusted EPS loss was $0.41, compared to a net loss of $10.5 million or $0.32 per diluted share last year [49][41] - Inventory levels increased by 33%, approximately $57 million, with 97% of inventory in current products [50][49] Business Line Data and Key Metrics Changes - Women's business declined by 4%, but the first layer category grew by 22% and the heirloom garden collection increased by nearly 70% [44][20] - Men's business saw a decline of 10%, primarily due to unseasonably warm weather affecting seasonal categories [44][24] - The company experienced a double-digit increase in average order value and digital traffic, although transactions contracted year-over-year [7][8] Market Data and Key Metrics Changes - Direct channel sales declined by 8.3%, while retail store sales decreased by 7.8% due to traffic decline [43][34] - Mobile penetration for site visits and sales increased, with 71% of visits and 57% of sales coming from mobile devices [15][28] Company Strategy and Development Direction - The company is focused on enhancing its assortment and inventory management through strategic initiatives and partnerships [10][54] - Plans to open two new stores in priority markets in the second half of 2025, while evaluating closures or relocations of underperforming stores [18][39] - The company is committed to improving operational effectiveness and financial performance through structural improvements and enterprise planning initiatives [10][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of a highly promotional environment and warm weather on sales, but noted improvements in top-line trends leading into the holiday season [7][9] - The company is focused on ending the fiscal year with clean inventory levels and maximizing returns from strategic investments [57][58] - Future gross margin is projected to decrease by approximately 125 basis points due to higher promotional activity [54][56] Other Important Information - The company completed the closure of its Dubuque fulfillment center, incurring restructuring expenses of $7.7 million [38][41] - Capital expenditures for the quarter were $5 million, significantly lower than the previous year's $9.9 million [51][41] - The company ended the quarter with $165 million in liquidity and $44 million in outstanding debt [52][32] Q&A Session Summary Question: What falls under the new threshold for store closures? - Management is assessing stores on a case-by-case basis as they approach renewal dates, focusing on profitability and potential closures or relocations [61] Question: What is the primary driver to improve SG&A? - Management highlighted the progress on key initiatives and the benefits from logistics strategies, which are expected to improve SG&A over the next few years [62][65] Question: Can unsold cool weather gear be packed away or must it be cleared by year-end? - Management confirmed that some seasonal items can be packed away for future sales, while others will be marked down to avoid impacting margins [77][75]

Core Viewpoint - Duluth Holdings reported a quarterly loss of $0.41 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.28, marking an earnings surprise of -46.43% [1] - The company’s revenues for the quarter were $127.06 million, missing the Zacks Consensus Estimate by 6.85% and down from $138.21 million a year ago [2] Financial Performance - Over the last four quarters, Duluth Holdings has surpassed consensus EPS estimates only once [2] - The company has experienced a significant decline in share price, losing about 30.9% since the beginning of the year, while the S&P 500 has gained 27.6% [3] Future Outlook - The future performance of Duluth Holdings' stock will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - Current consensus EPS estimate for the upcoming quarter is $0.36 on revenues of $245.6 million, and for the current fiscal year, it is -$0.16 on revenues of $640.3 million [7] Industry Context - The Textile - Apparel industry, to which Duluth Holdings belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Net sales for the third quarter decreased by 8.1% to $127.1 million, down from $138.2 million in the same period last year[5] - The company reported a net loss of $28.5 million, with an adjusted net loss of $13.8 million, compared to a net loss of $10.5 million in the prior year[3] - Direct-to-consumer net sales decreased by 8.3% to $79.8 million, primarily due to lower site conversion rates[5] - Net sales for the three months ended October 27, 2024, were $127,056, a decrease of 8.3% compared to $138,210 for the same period in 2023[24] - The company reported a net loss of $28,524 for the three months ended October 27, 2024, compared to a net loss of $10,474 for the same period in 2023, representing a significant increase in losses[24] - Net loss for the three months ended October 27, 2024, was $(28,524) thousand, compared to $(10,474) thousand for the same period in 2023, representing a 172% increase in losses[28] - Adjusted net loss attributable to controlling interest for the three months ended October 27, 2024, was $(13,751) thousand, translating to an adjusted EPS of $(0.41)[30] Profitability Metrics - Gross profit margin increased by 210 basis points to 52.3%, driven by successful sourcing initiatives[6] - Gross profit for the nine months ended October 27, 2024, was $202,031, down from $206,538 in the prior year, reflecting a decrease of 2.4%[24] - Adjusted EBITDA for the nine months ended October 27, 2024, was $5,662 thousand, down from $12,270 thousand in the same period of 2023, indicating a decline of 53.8%[28] - EBITDA for the three months ended October 27, 2024, was $(13,907) thousand, a significant decrease from $(2,588) thousand in the prior year[28] Expenses and Liabilities - Selling, general and administrative expenses rose by 1.2% to $82.9 million, resulting in a deleveraged SG&A as a percentage of net sales to 65.2%[7] - The company incurred restructuring expenses of $6,152 during the three months ended October 27, 2024, which were not present in the same period last year[24] - Restructuring expenses related to lease amendments totaled $7.7 million, with projected annual savings of approximately $5.0 million[10] - Total liabilities rose to $347,994 as of October 27, 2024, compared to $312,139 a year prior, indicating an increase of 11.5%[21] Cash Flow and Liquidity - The company ended the quarter with approximately $165 million in liquidity and $9.3 million in cash and cash equivalents[11] - Cash and cash equivalents decreased to $9,335 at the end of the period from $32,157 at the beginning, reflecting a decline of 71%[26] - The company reported a net cash used in operating activities of $58,125 for the nine months ended October 27, 2024, compared to $31,006 for the same period in 2023, indicating a worsening cash flow situation[26] - Net borrowings on the line of credit amounted to $44,000 during the nine months ended October 27, 2024, compared to $36,000 in the prior year, showing an increase in reliance on credit[26] Strategic Initiatives - The company is focused on enhancing operational and financial performance through strategic initiatives and improved inventory management[4] - The Adairsville fulfillment center processed over 65% of total network volume, significantly reducing fulfillment costs to 27% of the legacy centers' costs[9] Future Outlook - For fiscal 2024, the company expects net sales of approximately $640 million and a gross margin reduction of about 125 basis points compared to the prior year[12]

Core Insights - Duluth Trading Company reported a net sales of $127.1 million for the third quarter ended October 27, 2024, a decrease of 8.1% compared to $138.2 million in the same period last year [2][5] - The company experienced a net loss of $28.5 million, with an adjusted net loss of $13.8 million, which excludes restructuring expenses and a valuation allowance on deferred tax assets [2][10] - Gross margin improved by 210 basis points to 52.3%, driven by successful sourcing initiatives, although gross profit decreased to $66.4 million from $69.4 million year-over-year [6][2] - Selling, general and administrative expenses increased by 1.2% to $82.9 million, leading to a deleveraging effect as a percentage of net sales [7][2] - The company ended the quarter with approximately $165 million in liquidity, including $9.3 million in cash and cash equivalents [11][2] Financial Performance - Direct-to-consumer net sales fell by 8.3% to $79.8 million, primarily due to lower site conversion rates, while retail store net sales decreased by 7.8% to $47.2 million [5][2] - Adjusted EBITDA decreased by $5.2 million from the prior year to $(6.8) million [2][24] - The company expects net sales for fiscal 2024 to be approximately $640 million, with a projected gross margin reduction of about 125 basis points compared to the previous year [12][2] Management Commentary - The CEO noted that the third quarter performance was impacted by an uncertain macro environment and unseasonably warm weather, but there was growth in average order value and digital traffic [4][2] - The company is focused on improving inventory management and operational performance, with plans to enhance assortment and inventory management through strategic initiatives [4][2] - The fulfillment center in Adairsville, Georgia, processed over 65% of total network volume, significantly reducing costs and improving delivery times [9][2] Restructuring and Cost Management - The company incurred restructuring expenses of $6.2 million during the third quarter, related to lease amendments aimed at reducing overhead costs [10][2] - The exit from a legacy facility is projected to save approximately $1.2 million in overhead expenses during the fourth quarter [10][2] - The company is implementing phase two of its fulfillment center network plan to maximize productivity and capacity [8][2]

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Earnings Announcement - Duluth Holdings Inc will report its third quarter 2024 financial results before the market opens on Thursday December 5 2024 [1] - A conference call and audio webcast with analysts and investors will be held on the same day at 9:30 am Eastern Time to discuss the results and answer questions [1] Conference Call Details - Live conference call numbers are 1-844-875-6915 (domestic) and 1-412-317-6711 (international) [2] - Conference call replay will be available through December 12 2024 with numbers 1-877-344-7529 (domestic) and 1-412-317-0088 (international) and access code 2540359 [2] - Live and archived webcast will be available at ir duluthtrading com [2] - Investors can pre-register at https://dpregister com/sreg/10193192/fda17fd748 to receive a personalized phone number and pin for expedited entry into the call [2] Company Overview - Duluth Trading is a growing lifestyle brand for the Modern Self-Reliant American based in Mount Horeb Wisconsin [3] - The company offers high quality solution-based casual wear workwear and accessories for men and women who lead a hands-on lifestyle [3] - Products are sold exclusively through the company's content-rich website catalogs and unique retail locations [3] - The company is known for its engaging and entertaining marketing approach incorporating humor and storytelling to convey product uniqueness [3] - Duluth Trading is committed to outstanding customer service backed by its "No Bull Guarantee" [3]

Core Viewpoint - Duluth Trading's Q2 results exceeded investor expectations, leading to a nearly 20% increase in share price, indicating positive trends in both sales and margins, suggesting potential for above-market returns at current price levels [2][8]. Sales Performance - Q2 sales reached $141.6 million, a 2% increase from $139.1 million in Q2 of the previous year, and a significant rise from $116.7 million in Q1 2024, reflecting seasonal benefits [3][4]. - Direct-to-Consumer (DTC) sales grew by 5.6% to $91.7 million, while in-store retail sales declined by 4.4% to $49.9 million, indicating a shift in consumer purchasing behavior [3][4]. - The increase in DTC sales is attributed to improved demand and a higher mix of new products, while retail sales faced challenges due to lower traffic [3][4][5]. Margin Analysis - EBITDA margins improved to 7.5% in Q2, up 135 basis points from 6.15% in Q2 of the previous year, and significantly higher than 1.6% in Q1 2024 [6]. - Lower Average Unit Retail (AUR) prices due to increased promotions negatively impacted product margins, but sourcing initiatives and operational efficiencies from a new fulfillment center helped offset some of these pressures [6][7]. - Future margin growth is anticipated due to cost savings from lease terminations and improved operational efficiencies [6][7]. Valuation Insights - Duluth Trading has a market cap of approximately $133 million, with an enterprise value of around $160 million, supported by a solid cash position and manageable debt levels [7]. - Projections suggest potential sales of $685 million and EBITDA of $60 million by FY26, indicating a favorable growth trajectory [7]. - A valuation multiple of 14x free cash flow could lead to a market cap of $420 million by FY26, suggesting significant upside potential from current trading levels [7]. Future Outlook - The company plans to open two new stores in the second half of the year, which could contribute an additional $10 million in consolidated sales [5][7]. - Despite challenges in the retail environment, Duluth Trading is expected to continue improving its earnings power and free cash flow generation, which should enhance market valuation over time [8].

Joe Hendrickson Duluth Holdings' (NASDAQ:DLTH) 2Q24 was not very surprising from a results perspective, but the markets liked the quarter, with the stock reaping almost 30% in the few days after the release. This seems normal for a company with significant operational leverage, in which small tweaks to sales and margins make a big difference in profitability. From an operational standpoint, I still do not see improvement in what, I believe, are Duluth's key operational problems: assortment and inventory man ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 28, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 001-37641 __________________________________ ...

Duluth Holdings Inc. (NASDAQ:DLTH) Q2 2024 Earnings Conference Call August 29, 2024 9:30 AM ET Company Participants Nitza McKee - Investor Relations Sam Sato - President & Chief Executive Officer Heena Agrawal - Senior Vice President & Chief Financial Officer Conference Call Participants Janine Stichter - BTIG Jonathan Komp - Baird Dylan Carden - William Blair Operator Good morning, and welcome to the Duluth Holdings Inc. Second Quarter 2024 Conference Call. [Operator Instructions]. Please note this event i ...